China’s recent financial instability has provided a boon for the safe returns offered investors by P2P lending. And China Rapid Finance is a beneficiary.

The renminbi was weakened in early August, and the Shanghai stock market dove nearly 10% later this month. But P2P lending is going strong, returns are steady, and defaults are low, Zane Wang, CEO of China Rapid Finance, a P2P marketplace for consumer loans, told Bank Innovation.

Easy access to credit is the next big thing for China’s emerging middle class, and China Rapid Finance is the largest and oldest peer-to-peer lender in the world’s largest (and arguably oldest) nation. The Shanghai-based marketplace is offering small loans via social media to some of China’s 500 million creditworthy customers that currently lack access to credit.

China Rapid Finance (CRF) did a promotional tour through New York last week, and is rumored to be gearing up for an initial public offering.

“There are 800 million financially active consumers in China, and only 300 million have credit access,” Wang told Bank Innovation. Of those 500 million, CRF used its “predictive selective technology” to isolate 50 million and approached them in February via Tencent, the massive internet portal and social media media network based in Shenzen, China. The offer was for approximately one week’s wages, 500 renminbi or $80, and could be accepted with a few clicks. The underwriting was based on information already held by Tencent.

China Rapid Finance operates on the Orchard platform for marketplace lenders.

CRF’s target group of borrowers in the Tencent deal was what Wang calls EMMAs — Emerging Middle-class Mobile Activated. This refers to young people primarily under 30 who have “mobile access, but no credit access,” Wang said. The average annual fee for the loans was approximately 21% with a 1% fee on top of that. P2P loans from CRF typically have short cycles, and first-time borrowers take out an average of five loans in their lifetime as customers, Wang said. The goal is to continue the relationship and then graduate borrowers into an auto loan, home loan, or credit card. Those efforts are in their early stages, Wang said.

Banks are unable to make this model viable due to costs and regulations, Wang said. But banks — and not just Chinese banks — are keenly interested in CRF’s highly attractive customer base.

Founded in 2001, China Rapid Finance has funded approximately 2.5 million loans. Getting to 10 million to 15 million borrowers is Wang’s goal for the coming year. The company closed a $35 million Series C round in July and there is that IPO rumor, according to TechCrunch. Wang declined to comment on the rumors.

P2P lending remains more peer-to-peer in China versus the U.S., where institutions have taken over and 80% of consumer loans are used to refinance other debt. Investors on the platform are affluent consumers looking for a safer return than China’s volatile stock market. Far more common than consumer lending, however, are P2P loans in larger amounts to small businesses, according to Wang.

Wang claims the company has no significant competitors, though it should be noted JD.com as well as Alibaba subsidiary Ant Financial offer consumer credit as well.

“We own this segment,” he said.

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